Thanksgiving and the art of investing


Thanksgiving has always been one of my favorite holidays.

As a child it was about getting together with my family and playing with cousins and eating a very large meal topped off with some of my favorite desserts.

As a parent, it is fun to watch my children play with their cousins and watch their eyes light up when all their favorite foods come to the table.

 

investing

 

Successful Harvest

Certainly, for all those that live in US, we have a lot to be thankful for.

Thanksgiving traces its roots back to the Pilgrims in 1621. It was a celebration for their successful first harvest in the new world and lasted for three days.

It was attended by both the Pilgrims and the Native Americans in what is today Plymouth, Mass. This successful harvest was made possible from working and learning how to cultivate the land and hunting and fishing.

 

Cultivation

They did this with the help of the Native Americans in the region. Indeed they had much to be thankful for, these were not easy tasks.

Every year I grow a vegetable garden in my yard. I usually start out sometime in March preparing the soil.

Living on Long Island in New York, March can still be a very cold time of the year. To stand outside and do this takes real dedication.

We have a tradition of trying to grow all of our plants from seeds which, of course, takes more time and patience.

 

Growth Dynamics

However, to us there is a greater sense of satisfaction to watch them grow over time.

We usually start this part around the last week of March indoors: this allows the plants to grow and get ready for the outdoors.

By Mother’s Day everything is ready to go into the ground and nature takes over for the most part.

However, I still have to remember to weed, provide water, and fertilizer to make sure my plants can produce to their greatest potential.

 

Harvest Time

By September the season is starting to slow down and production stops.

At this point we clean the garden out to prepare for the following year.

Having a garden takes time and work, so I can appreciate what the Pilgrims must have went through without having all the modern day equipment.

Their livelihood literally depended upon the success of their crops, not like my little garden.

 

Seed Financing

Investing isn’t all that different from growing a garden. It starts with an idea. I equate ideas to seeds, because you will have to come up with many ideas, just like you have to plant many seeds to just get a few plants to grow.

Some ideas will take you to a dead end and some ideas will just lead to bigger ideas.

All of these ideas will eventually keep getting smaller and smaller until you are left with a just a few and of those a few will get planted into your portfolio.

 

Bountiful Returns

Not all of these ideas will bear fruit though, some will wilt and die off and will have to be removed from the portfolio.

For the harvest to be successful you need to constantly evaluate the portfolio and monitor how the positions are doing.

The positions that are doing well and meeting expectations will flourish. The positions that are not, will be removed so better positions can be added.

The idea is to continually monitor the garden so that you can seek to maximize the returns.

 

Exit Strategy

When I examine a company for a potential investment, I think about the reason for making the investment.

Where does it fit into my portfolio, what will be the impact of the addition of this company to my portfolio.

I tend to think of what my expectations for the company are and things I want to see that company produce.

Also, I need to have an exit strategy, I need to know what will trigger the sale. I have to outline all of this before I can even really begin to evaluate a company.

At the end of the season when you go to harvest the reward will come if you put in the hard work. Given this and the time spent you should have a bountiful harvest.

 

Holiday Check

Obviously, there are some outside variables you can’t control which will impact your overall return. However, if you are paying attention to the variables you can make sure to prepare the best you can.

This holiday season after you have wrapped up your Thanksgiving, take a moment and go through your investments.

See if they are growing the fruits and vegetables you want and make sure they are maximizing their return.

If not, take a step back and re-evaluate and think about the variables affecting the investments you have to determine if they are producing the harvest you will need to make it through the winter

(This article was originally published on November 25, 2015.)

Photo Credit: Anthony Quintano via Flickr Creative Commons

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Mott Capital Management, LLC
Mott Capital Management, LLC
Mott Capital Management uses a long-term thematic growth approach to investing in equities. We search for investments that both reflect and help to shape generational and demographic shifts. Mott uses a philosophy of buying these companies for a 3- to 5-year time horizon, with the belief that a long-term holding period gives themes and our chosen companies a chance to fully develop. In our view, the long time horizon also serves to mitigate the risk associated with the short-term impact of market volatility.